With reference to A K Bhattacharya's piece, "Arun Jaitley's Budget firsts" (August 31), I agree with the author that this year onwards, the annual Budget-making exercise will not only be unusual but different, too. Finance Minister Arun Jaitley is learnt to be working towards incorporating far-reaching changes in its composition as well as timing of presentation from next year.
As pointed out by the writer, the rolling out of the new indirect tax regime encompassed in the goods and services tax (GST) in lieu of a plethora of taxes such as excise, service tax, value-added tax, central/state sales taxes will result in a big shift in the budgetary exercise. The focus will shift to expenditure allocations from all these subsumed taxes.
It's a different matter that the Federation of Indian Chambers of Commerce and Industry is of the view that at least six months will be needed from the date of adoption of the GST law by the GST Council. Also, there is still no unanimity between industry and states over the GST's most appropriate standard rate, apart from issues relating to granting of input credits and taxation of various e-commerce-linked transactions.
Nevertheless, we are likely to witness key changes next year, which include the manner of classification of the government's expenditure, the targeting of fiscal consolidation, budgetary provisions for the Indian Railways (as Rail Budget has been done away with) and advancing the Budget presentation to January 2017 from its traditional schedule in February-end. There might be some changes in the direct tax regime, too.
It would not be feasible to switch over to a new financial year cycle from the April-March periodicity at present easily. This issue has to be discussed and debated, else it might be self-defeating.
The government should consider aligning itself with the cycle of July-June currently followed by the Reserve Bank of India. Such a move could lead to better harmony and proper financial coordination between the government and the central bank in consonance with overall national economic priorities.
Jaitley should desist from rushing, in trying to usher in out-of-the-box changes in the Budget, all in one go.
Kumar Gupt Panchkula
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